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Energy Growth Conference – Peyto Exploration & Development Corp

Peyto Exploration & Development Corp · Nov 1, 2012 · 48 slides

Investor presentation from the Shale Experts oil & gas presentation and slide database. Every page is imaged and its text indexed for search across operators, plays, basins and time.

Slides

  1. Energy Growth Conference – Peyto Exploration & Development Corp – slide 1
    2011 2003 2010 1998 2003 www.Peyto.com First Energy Capital November 2012 Energy Growth Conference
  2. Energy Growth Conference – Peyto Exploration & Development Corp – slide 2
    Peyto Profile PEYTO Exploration & Development Corp. N TSX Listing: PEY N Monthly Dividend: 0.06/share N Shares Outstanding: 144 million (5% insider ownership) N Current Production: 300 MMCFe/d (51,000 boe/d) N Net Debt: 100…
  3. Energy Growth Conference – Peyto Exploration & Development Corp – slide 3
    The Peyto Strategy Deploy Superior Business Acumen N Deep basin technical expertise N Continuous focus on returns N Internally generated drilling ideas (over 1,100 locations to date) Develop Superior Assets N Operated and…
  4. Energy Growth Conference – Peyto Exploration & Development Corp – slide 4
    The Peyto Strategy Superior Shareholder Return 40 30 Shareholder IRR 20 10 - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Share price w/div Share price 5 Historical…
  5. Energy Growth Conference – Peyto Exploration & Development Corp – slide 5
    The Peyto Strategy Growth per Share 2012 YE Target 57,000 boe/d or 395 boe/d/mmsh 400 10 50 Production per Unit or Share (boe/d per million) 9 350 8 300 7 Gas Price (/GJ) PEY+ Cum Div 250 6 200 5 25 4 150…
  6. Energy Growth Conference – Peyto Exploration & Development Corp – slide 6
    Peytos Profitable Business
  7. Energy Growth Conference – Peyto Exploration & Development Corp – slide 7
    Peytos Profitable Business Build it for less than we sell it Land 25MM PEY 2011A Seismic 3MM Drilling 175MM PDP FD&A Compl. 104MM /mcfe (2.12) Wellsite Facilities 32MM 40MM 379MM PDP Reserves (before Prod.) 29.8 mmboes PDP…
  8. Energy Growth Conference – Peyto Exploration & Development Corp – slide 8
    Peytos Profitable Business Cost Control Challenges for the Canadian Industry CND 2011* CND 2010* CND 2009** PDP FD&A /mcfe (4.20) (4.74) (4.31) Cash Costs /mcfe (3.91) (3.64) (3.63) Sales Price /mcfe 7.89 7.60 7.27 (0.68)…
  9. Energy Growth Conference – Peyto Exploration & Development Corp – slide 9
    Payout History Peytos Dividend Sustainability 1,600 1,400 1,200 (Millions) 1,000 800 Peyto Cum. Earnings 600 Q3/12 400 200 0 Q1 2000 Q4 2000 Q3 2001 Q2 2002 Q1 2003 Q4 2003 Q3 2004 Q2 2005 Q1 2006 Q4 2006…
  10. Energy Growth Conference – Peyto Exploration & Development Corp – slide 10
    Peytos Profitable Business Focus on Returns Drives Capital Discipline 2011 17,500/boe/d 2010 17,300/boe/d 2009 17,300/boe/d 50,000 2008 33,100/boe/d Annual Production Wedge 2007 26,500/boe/d 2006 50,300/boe/d 2005…
  11. Energy Growth Conference – Peyto Exploration & Development Corp – slide 11
    Peytos Profitable Business Lowest Operating Costs Gas Producers 1 %/yr 12 BOE factor - 6 mcf = 1 bbl of oil equivalent 11/15/2012 Operating costs include transportation
  12. Energy Growth Conference – Peyto Exploration & Development Corp – slide 12
    Peytos Unique Assets
  13. Energy Growth Conference – Peyto Exploration & Development Corp – slide 13
    Peytos Assets Geographically Focused Core Areas 400,000 net acres R11 R9 R7 R5 R3 R1W6 R26 R24 R22 R20 (InclR18ONR) R16 R14W5 T65 7 operated gas plants T65 Waskahigan ---(420 mmcf/d net capacity) T63 Cutbank 1000+ km…
  14. Energy Growth Conference – Peyto Exploration & Development Corp – slide 14
    Peytos Assets Multi Zone Stacked Sandstone Reservoirs Up to per section 15 *NGL recoveries can increase by up to 15 bbl/mmcf with deeper cutting processing facilities 11/15/2012
  15. Energy Growth Conference – Peyto Exploration & Development Corp – slide 15
    Peytos Assets Deep Basin Lands Go A Long Way Net Peyto Sections Net Sections of Cardium, Dunvegan, Notikewin, Falher, Wilrich, Bluesky, & Cadomin Net Sections for 2.2 TCFe of 2P EUR* TCFe Trillion Cubic Feet equivalent…
  16. Energy Growth Conference – Peyto Exploration & Development Corp – slide 16
    Peytos Assets Large Hz MSF Inventory Done To Do Total Total Total Total Vertical Hz Hz Hz Locations Wells Wells Locations Unbooked Booked* 432 48 200 57 5 1 6 10 1 2 2 12 90 40 44 84 7 13 12 49 13 22 99 14 93 83 117…
  17. Energy Growth Conference – Peyto Exploration & Development Corp – slide 17
    Peytos Assets Liquids Rich Natural Gas Peyto Q3 2012 Realized Prices Natural Gas 2.08/GJ** Ethane C2H6 7/bbl = 2.45/GJ* Propane C3H8 20/bbl = 4.86/GJ Liquid Conversion Existing Cheap Deep Cut Butane C4H10 58/bbl = 13.00/GJ…
  18. Energy Growth Conference – Peyto Exploration & Development Corp – slide 18
    Peytos Assets The Peyto Cheap Cut 8,200 KPa Gas +15-17% HC -35 oC 8,200 KPa Gas +5-10% HC PV=zRT 97% 50% 30% C5+ C4 C3 50% -80 oC C4 3-4,000 KPa 22 bbls/mmcf 15-20 C Gas/Liquid 15 bbls/mmcf 60% C3…
  19. Energy Growth Conference – Peyto Exploration & Development Corp – slide 19
    Peytos Assets Facility Ownership and Control Peyto Gas Plants Cheap cut ETA WI Oldman 125 mmcf/d Q4 12 100% Nosehill 110 mmcf/d* Q1 13 100% Wildhay 60 mmcf/d* Q3 13 100% Ansell 9-34 60 mmcf/d TBD 69% Kakwa 35 mmcf/d TBD…
  20. Energy Growth Conference – Peyto Exploration & Development Corp – slide 20
    Peytos Assets PEY/ONR Strategic Fit Pedley Edson Ansell 21 ONR Acquisition closed August 15, 2012. See press release dated July 3, 2012 11/15/2012
  21. Energy Growth Conference – Peyto Exploration & Development Corp – slide 21
    PEY/ONR Strategic Fit ONR is Step 1 in Longer Term Plan PEY ONR Spirit River PNG Spirit River PNG Expiries Apr 1/12 - Jul 1/13 SPIRIT RIVER 12 MONTH PNG EXPIRY Notikewin Falher Wilrich 22 *Expiries to July…
  22. Energy Growth Conference – Peyto Exploration & Development Corp – slide 22
    Peytos Incredible Returns
  23. Energy Growth Conference – Peyto Exploration & Development Corp – slide 23
    Full Cycle IRR (%) 0 10 20 30 40 50 60 70 80 90 100 100/131805521W5/00 100/041605621W5/00 102/093005421W5/00 100/021805905W6/00 100/081705702W6/00 100/121505422W5/00 100/120305622W5/00 37%…
  24. Energy Growth Conference – Peyto Exploration & Development Corp – slide 24
    Peytos Returns High Returns on Capital and Equity 60% 10 50% 8 40% 6 30% 12 yr Average ROE 4 20% 10% 2 0% 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 0 Return On Capital Employed (%) Return On…
  25. Energy Growth Conference – Peyto Exploration & Development Corp – slide 25
    2013 Outlook Continued Counter Cyclical Growth 62,000-67,000 boed 70,000 70,000 57,000 boed 60,000 60,000 50,000 50,000 40% CAGR 40,000 (35%/share) 40,000 BOED 30,000 30,000 Base decline 34% 20,000 20,000 Base…
  26. Energy Growth Conference – Peyto Exploration & Development Corp – slide 26
    2013 Outlook Biggest Year Ever Drill (100% Hz Wells, Liquids Rich Natural Gas) Expand & Extract Increase Processing Capacity & NGL Yield Increase Undeveloped Land Base Shoot Seismic 2013 Capital Program Acquire Additional…
  27. Energy Growth Conference – Peyto Exploration & Development Corp – slide 27
    Peytos Returns Maintain a Strong Balance Sheet Q2 2012 Net Debt/FFO 4.0 3.5 3.0 Peyto Q2/12 D/FFO 2.5 2.0 1.5 1.0 0.5 0.0 BTE POU NGL ARX PRQ PWT AAV PMT CPG ERF PBN PGF CR ZAR…
  28. Energy Growth Conference – Peyto Exploration & Development Corp – slide 28
    Peytos Returns Careful Use of Debt 2.5 100% 2.0 80% 1.5 60% 1.0 40% 0.5 20% Average Net Debt - 0% to NPV PDP NPV8 (B) Net Debt/PDP NPV8 Proved Developed Producing (PDP) Net Present Value (NPV) discounted at 8%, as…
  29. Energy Growth Conference – Peyto Exploration & Development Corp – slide 29
    Future Outlook Organic Growth Potential 80,000 70,000 60,000 50,000 First forecast NA BOED LNG exports. 40,000 30,000 20,000 10,000 0 30 11/15/2012
  30. Energy Growth Conference – Peyto Exploration & Development Corp – slide 30
    Appendix Quarterly Track Record Peytos Profitable Business Peytos Assets Peytos Returns Tax Pools Gas Marketing Liquids Marketing Hedging Strategy FAQ 31 11/15/2012
  31. Energy Growth Conference – Peyto Exploration & Development Corp – slide 31
    Quarterly Track Record 2012 2011 2010 Q3 Q2 Q1 Total Q4 Q3 Q2 Q1 Total Q4 Q3 Q2 Operations Production Oil & NGLs (bbl/d) 5,236 4,480 4,101 3,856 3,947 3,918 3,811 3,746 3,389 3,439 3,322 3,465 Natural gas (mcf/d) 244,794 221,176…
  32. Energy Growth Conference – Peyto Exploration & Development Corp – slide 32
    Peytos Profitable Business Build it for less than you sell it 8 2011 PP FD&A 6 /mcfe AECO 4 10 Monthly 10 /GJ 2 Peyto Unhedged Realized Price (/mcfe) Peyto Realized Gas Price (/mcfe) 8 39% 8 - Average PRQ*…
  33. Energy Growth Conference – Peyto Exploration & Development Corp – slide 33
    Peytos Profitable Business Liquids Rich Gas Streams Effective Gas Price per Mcfe (assumes 100/bbl oil) 6 Effective Price (/Mcfe) 5 4 Cardium (45 bbl/MMcf sls) Wilrich (7 bbl/MMcf sls) 3 + PP FD&A 2.12/Mcfe Notikewin…
  34. Energy Growth Conference – Peyto Exploration & Development Corp – slide 34
    Peytos Assets Deep Basin Permeability Segregation FOOTHILLS STRUCTURES GAS AS ING INCRE BILITY EA PERM WATER TRANSITION ZONE WATER GAS ASE INCRE AREA OF GAS DEPTH MATURATION 35 11/15/2012
  35. Energy Growth Conference – Peyto Exploration & Development Corp – slide 35
    Peytos Assets Longest Reserve Life 10 Peyto 2011 PP RLI (yrs) 5 0 Industry 2011 PP RLI (yrs) 36 2011 Year End Proved Producing Reserve Life (using Q4 2011 production rate). 11/15/2012 Source: Company AIF &…
  36. Energy Growth Conference – Peyto Exploration & Development Corp – slide 36
    Peytos Assets Lowest Operating Costs 20 15 10 Peyto 2011 Op Costs (/boe) 5 Industry 2011 Op Costs (/boe) Operating Costs include Transportation costs. (/boe) 37 BOE factor - 6 mcf = 1 bbl of oil equivalent 11/15/2012
  37. Energy Growth Conference – Peyto Exploration & Development Corp – slide 37
    Peytos Assets Deep Gas Drilling Royalty Incentives 3,500-4,000 m MD Trigger depth for Natural Gas Deep Drilling Program 2,200 m reduced from TVD 2,500m TVD to 2,000m TVD 3,700-4,000 m MD 2,650-2,850 m TVD 4,200 m MD…
  38. Energy Growth Conference – Peyto Exploration & Development Corp – slide 38
    Peytos Assets Lowest FD&A Cost 50 40 30 Peyto 2011 PP FD&A (/boe) 20 10 Industry 2011 PP FD&A (/boe) 39 Proved Producing FD&A Cost Inclusive of Acquisition, Finding and Development Capital *Inclusive of significant…
  39. Energy Growth Conference – Peyto Exploration & Development Corp – slide 39
    Peytos Assets Low FD&A Costs = High Recycle Ratio Proved Producing 50 Total Proved Proved + Probable 40 Field Netback 30 20 Peyto PP Recycle Ratio 10 (10 yr) 0 Recycle Ratio is the Netback divided by FD&A *FD&A costs…
  40. Energy Growth Conference – Peyto Exploration & Development Corp – slide 40
    Peytos Assets Lowest Total Costs 200% Total Costs as % of Total Revenue 150% 100% Peyto 2011 Margin 50% 0% Op Costs Royalties G&A Interest PDP FD&A Industry 2011 Margin 41 Total Costs per boe includes…
  41. Energy Growth Conference – Peyto Exploration & Development Corp – slide 41
    Peytos Returns Returns Driven Strategy 45,000 40,000 35,000 2011 30,000 25,000 Net Capital to PV5 BOED 20,000 15,000 10,000 5,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011…
  42. Energy Growth Conference – Peyto Exploration & Development Corp – slide 42
    Peytos Returns Strong Per Share Operating and Profit Margin 140 Revenue 120 100 80 millions 60 Funds from 40 Ops Profit Margin 20 Earnings (last 12 yrs) 0 43 Funds from Operations is defined as earnings before…
  43. Energy Growth Conference – Peyto Exploration & Development Corp – slide 43
    Peytos Returns Shareholder Returns = NAV Growth + Income 60 Cum Div/Dist P+P 50 PV5 debt adj./share TP 40 PDP 30 20 10 Compound Annual - Growth Rate 44 PV5 DA/share is Before Tax Net Present Value, discounted…
  44. Energy Growth Conference – Peyto Exploration & Development Corp – slide 44
    Organic Business Model Peytos Tax Pools 1,400 1,200 282 1,000 800 Millions 600 537 Federal Tax Pools Q3/12 400 170 200 203 - 37 CEC UCC (25%) CEE (100%) CDE (30%) COGPE (10%) CAPEX Peyto Cum. CapEx Q3/12…
  45. Energy Growth Conference – Peyto Exploration & Development Corp – slide 45
    Gas Marketing Future Sales Financial Hedges - Gas Pricing 2011 2012 2013 2014 Te rm GJ/d (/GJ) A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O From To 01-Apr-10 31-Mar-12 5000 5.670 01-Apr-11…
  46. Energy Growth Conference – Peyto Exploration & Development Corp – slide 46
    Liquids Marketing Future Sales Financial Hedges - Propane 2012 2013 2014 Term bbl/d Pricing (/bbl) A M J J A S O N D J F M A M J J A S O N D J F M From To 1-Sep-12 31-Mar-13 66 49.56 1-Sep-12 31-Mar-13 66 44.10 1-Sep-12 31-Mar-13…
  47. Energy Growth Conference – Peyto Exploration & Development Corp – slide 47
    Successful Hedging Strategy Peyto Realized Price History 2003 2004 2006 2008 2009 2010 2011 16.00 2005 2007 Peyto Peyto Peyto Peyto Peyto Peyto Peyto Peyto Peyto 7.51/mcf 7.38/mcf 8.78/mcf 8.48/mcf 8.42/mcf 8.64/mcf 6.44/mcf…
  48. Energy Growth Conference – Peyto Exploration & Development Corp – slide 48
    PEY.TO Corporate Fact Sheet PEYTO Exploration & Development Corp. N Long Reserve Life Asset 9 yrs PDP, 22 yrs P+P at YE 2011 N Lowest Cost Producer 1.00/mcfe (6.02/boe) cash costs* Q3/12 N Superior Shareholder Returns Ave ROCE…

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